Igor Surkis & Ors v Petro Poroshenko & Anor

State immunity depends on the character of the impugned conduct, assessed in its full context. Conduct remains official where public office supplied the authority, status or influence through which it was performed, even if the alleged purpose was personal, improper or unlawful. The immunity belongs to the foreign state or sovereign entity, not personally to its servant or agent, and only the state can waive it expressly or unequivocally.

The foreign act of state doctrine prevents an English court from adjudicating on the validity of a foreign sovereign act taking place or taking effect in that state. A first-instance foreign judgment which has no legal effect cannot establish the invalidity of that act. Serious allegations of fraud or dishonesty require particularised primary facts, and reverse summary judgment is appropriate where the pleaded case has no realistic prospect of success.

The claim arose from Ukraine’s nationalisation of PrivatBank. The claimants alleged that Petro Poroshenko, formerly President of Ukraine, and Valeria Gontareva, formerly Governor of the National Bank of Ukraine, conspired to procure their designation as related parties to PrivatBank. That designation caused their accounts to be subjected to a bail-in.

The defendants applied for jurisdictional and merits relief. The issues included state immunity under the State Immunity Act 1978, the foreign act of state doctrine, the effect of an ineffective Ukrainian administrative judgment, and whether the conspiracy and intentional wrongdoing allegations were properly pleaded and had a realistic prospect of success.

1. State immunity. The claims were barred by sections 1, 14(1) and 14(2) of the State Immunity Act 1978. The relevant conduct was the alleged procurement of the designation, considered in the context of the Ukrainian state’s nationalisation and bail-in of PrivatBank. The defendants’ public offices supplied the ability to appoint or influence the relevant Ukrainian bodies. It was artificial to separate that official capacity from the alleged private purpose. An improper or personal motive did not alter the character of conduct performed under colour of official authority.
2. The immunity was Ukraine’s, or the NBU’s where applicable, rather than a personal immunity belonging to the individual defendant. Conduct by an official or agent in the discharge or purported discharge of public functions was protected by the same cloak as protected the state or sovereign entity.
3. Submission and waiver. The second defendant’s acknowledgment of service, defence, amendments and summary judgment application did not waive immunity. Under section 2, waiver had to be express or unequivocal and authorised by the state. The Lukianov letter did not waive Ukraine’s immunity. It proceeded on the mistaken basis that the proceedings were private-law claims which did not engage state immunity, and it did not address the request for waiver. The author’s authority was also unestablished.
4. Foreign act of state. The designation was an executive sovereign act of Ukraine, taking place and taking effect in Ukraine as an integral part of the nationalisation of a Ukrainian bank. The doctrine therefore barred adjudication on its alleged unlawfulness. The presence of accounts at PrivatBank’s Cyprus branch did not disapply the doctrine. The doctrine also applied to the consequential bail-in arrangements and debiting of the accounts where those matters remained dependent on the alleged invalidity of the designation.
5. A Ukrainian first-instance administrative judgment which had not been approved on appeal had no legal effect and could not establish that the designation was unlawful. The court would not stay the proceedings to await a future Ukrainian decision. The claim for lawful means conspiracy did not itself raise an act of state issue, but it nevertheless failed on the merits.
6. Pleading and summary judgment. The allegations against Gontareva were inadequately particularised. The pleaded telephone call, meeting, prior business relationship and unconnected Ukrainian decision did not justify an inference of dishonesty or conspiracy. The claim also failed to plead a sustainable unlawful means, sufficient knowledge of the alleged Bolvik and Harley transactions, or facts supporting a sole or predominant purpose of injuring the claimants. Reverse summary judgment was therefore granted on the whole claim, and the pleaded case was struck out. Permission to serve the proposed re-amended pleading was refused if required.